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Sever Plocker

Olmert, Bush and the bubble

Despite striking similarities, Israel and America facing different situations

The comparisons between America and Israel are natural. Both here and there, the country is headed by a leader who completely lost the public's trust. Here and there, public opinion polls reveal lowly approval ratings and a battered government. Here and there, the opposition is waiting for elections impatiently, while the coalition is cracking on the inside. Yet both here and there, the stock market is flourishing, the standard of living is rising, the government's budgetary situation is improving, unemployment is down, and corporate profits hit record highs.

 

The political crises, it appears on first glance, do not boil over to either the American or Israeli economy. Both here and there we see the surprising combination of a weak government and a strong economy, deteriorating politics and prospering businesses. However, this comparison is quite inaccurate. The differences outweigh the similarities.

 

President George W. Bush's political standing, despite the Iraq quagmire, is much better than the situation faced by Prime Minister Olmert: Bush's Administration will not be toppled; his approval rating has stabilized (at a low level, but still many times higher than Olmert's); his foreign minister is not calling on him to resign; his finance minister is not being investigated by police and he has not suspended himself.

 

Many Americans despise their president because of his uncompromising ideological views on weighty issues – the war in Iraq and on terror, human rights, the environment, taxation on the rich. However, his name is not mentioned in connection with dubious real estate deals, diverting tenders in favor of friends, and the granting of unusual benefits to investors represented by his lawyers.

 

Bush can still appear at rallies across America, and particularly in southern states that are leaping forward both economically and socially, and be received with cheers. Where in Israel can Olmert deliver a speech at the town square without expecting protests?

 

Living on another planet

When it comes to economics, the differences are more meaningful than the commonalities: In the United States, growth in the first quarter of the year slowed down to 1.3 percent; in Israel growth may total 7 percent. The inflation rate there is 3 percent, while in Israel it's negative: -0.9 percent. In recent months the US dollar weakened considerably vis-à-vis the euro and British pound; the Israeli shekel strengthened not only in relation to the dollar, but also to the other two currencies.

 

Despite what is referred to as "stock market records," the stock values of American companies have not yet returned to their real levels of seven years ago. The real records of stocks traded on the Israeli stock exchange were broken long ago.

 

The Bank of Israel's interest rate has been lowered by 1.75 percent since last fall. The American interest rate has remained unchanged, even though the Federal Reserve does not need to cope with employee sanctions or police investigations against former senior officials over false reports, as is the case in Israel.

 

The American economy is indeed affected by the Administration's weakness and is in the midst of recessions. It will be followed by a correction, because the Americans are concerned. The Israeli economy, meanwhile, lives on another planet. In its own eyes it is protected from any political earthquake and immune to its government's collapse of legitimacy. Nobody around here is concerned about anything. If there's a bubble, it's here in Israel, not there.

 

 


פרסום ראשון: 05.06.07, 16:20
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